PROJECT REPORT

ON

“TRANSPORT MANAGEMENT”

OF

IFFCO AONLA”

SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS OF THE AWARD OF THE DEGREE OF
BECHLOR OF BUSINESS ADMINISTRATION

SUBMITTED BY:
SAURABH TYAGI

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 Expression of sincere gratitude is just a partial acknowledgment. The accomplishment
of this project “TRANSPORT MANAGEMENT” I would have not been possible
vocabulary falls short of word to express my sincere gratitude to Mr. D R Kundra (Deputy
GM, Finance) and Mr. Rajan Kumar Keshri (Sr. Accounts Officer) under whose guidance
I had the opportunity to carry out the present work.
I am very thankful to Mr. D. Kalia, Chief Manager (Training ) & Mr. K.K.
Pandey, Dy. Manger (Training) who supported me & helped me throughout the
project. I am also thankful to Mr. Yogish Kumar Pundir and Mr. A.K. Mishra, who
provided me with relevant information and spared their precious time with me.

I am thankful to Finance & Account staff & to all the employees of IFFCO
who cooperated with me during my training period.

I OWE A DEEP SENSE OF GRATITUDE TO ALL THE RESPONDENTS

WHO GAVE ME VALUABLE INFORMATION FOR THE PROJECT.

2
42 YEARS OF COOPERATING GLORY

3
LIST OF CONTENTS Page No.

1) Introduction to topic 6
2) Objective of study 7
3) Research Methodology 8
4) Introduction about IFFCO 9-17
5) Objective of the company 18
6) Management 19-21
7) Aim, Vision, Mission 22-23
8) Vision 2010, Approach 24
9) Commitment, Principles 25
10) IFFCO’s Emblem 26
11) Organization chart of IFFCO 27
12) All India share of IFFCO 28
13) Performance highlights 29
14) IFFCO Associates 30
15) Awards galore 31-32
16) Aonla unit 33-38
17) Finance and accounts department 39-43
18) Inventory management 44-46
19) Various sections of inventory 47-52
20) Imported material 53
21) Material coding 54-55
22) Packing & Dispatch 56
23) Document for dispatch of goods. 57-58
24) Accounting of raw material 59-61
25) Store section 62
26) Verification of Inventories. 63-66

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27) Techniques of Inventory control 67-70
28) Criteria for judging the Inventory system 71-72
29) Inventory software 73
30) Data Entry menu 74-75
31) Reports Menu 76-82
32) Production department 83-86
33) Different vouchers 87-96
34) Rejection/Discreption Report 97-98
35) Tender enquiry 99
36) Performance bank guarantee 100-101
37) Material purchase Requitions 102
38) Store adjustment voucher 103
39) SWOT Analysis & Strategies 104-107
40) Conclusions & Recommendations 108-109
41) Bibliography 110

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INTRODUCTION TO THE TOPIC

INVENTORY MANAGEMENT

“Managing the level of inventory is like maintaining the level of water in a bath tub with
an open drain. The water is flowing out continuously. If water is let in too slowly, the tub
is soon empty. If the water is let in too fast, the tub overflows.”

The dictionary meaning of inventory is ‘stock of goods’. The investment in inventory is

very high in most of the undertakings engaged in manufacturing. The amount of
investment is sometimes more in inventory than in other assets. About 90 percent part of
working capital is invested in inventories. It is necessary for every management to give
proper attention to inventory management. A proper planning of purchasing, handling,
storing and accounting should form a part of inventory management. By proper planning
it is possible for a company to reduce its levels of inventories to a considerable degree,
without any adverse effect on production and sales, by using simply inventory planning

and control technique. The reduction in excessive inventories carries a favorable impact
on company’s profitability.

An efficient system of inventory management will determine

1) What to purchase
2) How much to purchase
3) From where to purchase
4) Where to store, etc.

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“Effective inventory management enables an organization to meet or exceed customers’
expectations of product availability while maximizing net profits or minimizing costs”

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 OBJECTIVE OF STUDY

“The main aim of study is to check the efficiency and effectiveness of inventory
management system at IFFCO Aonla.”

Investment in inventory incurs a high cost. Therefore effective management is necessary

to minimize the cost and ultimately increases profitability of an organization.

Apart from our main objective, our other objectives are:

1) To analyze the level of investment in inventory by IFFCO.

2) To study the inventory policy of the company.
3) To analyze the policy adopted by the company.
4) To analyze the financial position of the company.
5) To give suggestion if any, regarding effective inventory management, to ensure
smooth and uninterrupted supply without making unnecessary investment of funds
in inventory.

8
 RESEARCH METHODOLOGY

Research covers the search for retrieval of information for a specific purpose.
Basically research is the objective and systematic method of finding solution to a
problem. The steps followed to conduct this study are as follows:-

(1) Formulating research problem – The problem under study viz. how effective are
the measures applied by Iffco, Aonla to control the inventory is basically studied through
analytical research. Material is important for the efficiency of the system. It is a matter of
great importance for inventory department. Inventory department of IFFCO, Aonla is
responsible for efficient inventory control. Thus the whole study is conducted under the
guidance of officers of this department.

(2) Extensive literature survey – Many published studies, books or material on effective
control of inventory were referred to for getting a true direction to research process.

(3) Data collection – The study is conducted through collection of data through surveys,
interviews with officials etc. Personal interviews were conducted where a set of pre-
conceived questions were asked from the officers of inventory department regarding
material control policies adopted by them. Books of accounts of Aonla –I and Aonla – II are
studied thoroughly to details about inventory stock, cost of material consumed, increase and
decrease in stock in the last few years etc.

Sample of material was obtained randomly. ABC analysis was used where sample of
material was graded under three categories: A, B, C.

(4) Analysis and interpretation – The data about inventory is analysed to find out the
effectiveness and efficiency of inventory policy. As regards the financial performance, the
data about different financial indicators is analysed to calculate the different ratios and to
draw the graphs.

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 INTRODUCTION ABOUT IFFCO

During mid- sixties the co-operative sector in India was responsible for
distribution of 70 per cent of fertilisers consumed in the country. This sector had adequate
infrastructure to distribute fertilisers but had no production facilities of its own and hence
dependent on public/private sectors for supplies. To overcome this lacuna and to bridge
the demand-supply gap in the country, a new cooperative society was conceived to
specifically cater to the requirements of farmers. Thus was born IFFCO, the world’s
largest fertiliser cooperative. It was a unique venture in which the farmers of the
country through their own co-operative societies created this new institution to
safeguard their interests. Indian Farmers Fertiliser Cooperative limited, a multi-state
Cooperative has emerged as a role model for cooperatives Over 42 years of its inception,
IFFCO has turned into a true Cooperative – Of the Farmers, By the Farmers and For the
Farmers. IFFCO has steadily grown in strength and stature from a modest membership of
57 societies in 1967-68 to 39564 societies as on 31st March, 2008. The initial equity
capital of Rs.6 lakh contributed by the cooperatives in 1967-68 has also gone upto a paid-
up capital of Rs.426 crore.

Indian Farmers Fertiliser Co-operative Limited (IFFCO) was registered on

November 3, 1967 as a Multi-unit Co-operative Society. On the enactment of the Multi
state Cooperative Societies Act 1984 which was amended in 2002, the Society is deemed
to be registered as a Multi state Cooperative Society. The Society is primarily engaged in
production and distribution of fertilisers. The byelaws of the Society provide a broad
framework for the activities of IFFCO as a Cooperative Society.

A pioneer in this field, IFFCO’s growth reflects its belief in the strength of the
farmer. Several prestigious awards stand testimony to the fact that IFFCO is driven by its
values and the dedication of its people. This is an organisation that believes in fair play
and has always followed transparent and professional practices in corporate governance.

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 PRODUCTION

The largest producer of fertilisers in the country, IFFCO has five state-of-the-art
plants that ensure its special position. These are considered to be among the best
professionally managed fertiliser plants in the world.

IFFCO had set up the KALOL plant for manufacture of Nitrogenous Fertiliser and
KANDLA plant for manufacture of Phosphoric fertiliser. These plants commenced
commercial production in the year 1974-75. . Another ammonia - urea complex was set
up at Phulpur in the state of Uttar Pradesh in 1981. The ammonia - urea unit at Aonla was
commissioned in 1988. As part of the new vision and in order to augment its complex
fertilizer manufacturing capacity, IFFCO acquired DAP/NPK/NP plant in Paradeep,
Orissa in September 2005. This was a historic moment, for it was the first private sector
unit to be acquired by any Indian cooperative. The Paradeep unit was expected to achieve
an optimal production load during 2008-09. During 2007-08, IFFCO’s plants rolled out
68.47 lakh tonne of fertiliser material comprising 39.63 lakh tonne of urea and 28.84 lakh
tonne of NPK/DAP/NP which bears ample testimony to its superlative performance.
IFFCO’s market share in ‘N’ production is 20 percent and 25 percent in P 2O5 produced in
the country. IFFCO has initiated energy saving schemes in all its five ammonia plants at a
cost of Rs. 410 crore

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 MARKETING AND DISTRIBUTION

A strong marketing team and a sound distribution network make the bottom line
secure. Backed by this belief, IFFCO has gone all out to extend its reach, resulting in the
highest-ever sales of fertilizer material this year. With the completion of Kalol Expansion
Project, IFFCO is all set to realize the objective of producing 100 lakh tonne of fertilizers,
thereby attaining the distinction of world leader in fertilizer production. Every fourth bag
of fertilizer produced and every third bag of fertilizer sold in the country belongs to
IFFCO.

Around 40,000 cooperative societies and 158 Farmers Service Centres spread
across 29 states and union territories in India make sure that IFFCO’s products-
NPK/NP/DAP/UREA-are easily available to farmers.

These impressive figures have been made possible largely because of the fact that
IFFCO distributes its products through cooperative channels. Though the cooperative
structure may differ from state to state, the goal is to reach out to each district, taluka and
village and hence sell more.

This year, IFFCO has dispatched around 86 lakh tonne of fertilizer material from
its plants and ports by rail and road. With the aim of delivering to the doorstep of the
farmer in all parts of the country, the organisation hired storage space at more than 1,700
locations.

IFFCO’s Farmers Service Centres not only supply material under one roof, they are
used as contact points for providing technical know-how to farmers. These Centres also
organize promotional programmes such as soil test campaigns and farmers’ meetings.

. During 2007-08, IFFCO has notched up a record sale of 93.24 lakh tonne of
fertiliser material comprising of 54.29 lakh tonnes of urea and 38.95 lakh tonne of
NPK/DAP/NP witnessing a growth of 8.3% as against 86.10 lakh tonnes in the previous
year. Best ever marketing productivity also sprang to 6158 tonne/head.

12
 FINANCIAL PERFORMANCE

The society recorded an all time high turnover of Rs.12163 crore during 2007-08
while its pre tax profit stood at Rs.380.52 crore and profit after tax at Rs.257.59 crore. The
society declared a dividend of 20% for its shareholders for seventh successive year.

HUMAN RESOURCE – PUTTING PEOPLE FIRST

No vision, however grand, can be fulfilled without the cooperation of its people.
Recognizing this fact, IFFCO has made a sustained investment in its people, creating an
environment that attracts the best talent. At IFFCO, we see teamwork at its best.
Employees at all levels share a common dream, a dream that is understood in IFFCO’s
Vision 2010. Hence, enhancing skills is of great significance for the organisation.

Other initiatives to help the growth of its people included workshops on human
values, leadership and work ethics. There were also many technical activities that led to
development and skill upgradation. Employees were sponsored for participation I
prestigious both in India and abroad.

With the firm belief that Information and Communication Technology (ICT) helps
the people and the organisation to grow together, IFFCO has augmented its workflow
applications. The Corporate Data Centre in New Delhi has been refurbished with the latest
technology. A new VPN was created to provide round-the-clock connectivity in the
plants, zonal office and head office.

IFFCO has, over the years, successfully showcased its image in India and overseas.
Its achievements and its contributions to the farming community are highlighted in
various exhibitions and fairs.

13
 Given the fact that IFFCO acknowledge that people are the key drivers in its growth,
there is little wonder, then, that the work environment here is one that encourages
creativity and nurtures success.

A YEAR OF APPRECIATION (2008-09)

It was a moment of pride for every member when the President of India in the year
2007 lauded IFFCO’s efforts at conserving energy and keeping its consumption at the
lowest level. This National Energy Conservation Award 2008 was among many accolades
IFFCO received for its safety and conservation endeavours from FAI, CII and
Government of India. These awards, interalia, include for Best Production Performance,
Energy Conservation and Efficient Water Management to Phulpur Plant; Awards for Best
Technical Innovation, Safety and Environment Management to Aonla Plant; Energy
Conservation and Industrial Safety Award to Kalol Plant; and SUN and NDTV Green IT
Award to Kandla Plant.

In addition IFFCO has pocketed “SMART WORKPLACE AWARD” in the

manufacturing and industrial segment by the prestigious Economic Times, Acer Intel
Smart Workplace Award. At the world communications awards in London its associate
IKSL has been conferred award for Best Content Service and Best Project Management.

Another significant event was the laying of the foundation stone of India’s first-
ever Kisan SEZ (Special Economic Zone) by Dr. Y.S. Rajasekhara Reddy, Chief Minister
of Andhra Pradesh.

Further, IFFCO’s Managing Director, Dr. U.S. Awasthi, received honorary

Doctorate of Science degree from Dr Balram Jakhar, Governor of Madhya Pradesh, at the
Vikram University Campus in Ujjain.

Aonla Unit for the first time has crossed production of 20 lakh MT of urea which is
commendable. Paradeep has achieved greater laurels by producing more than 13 lakh MT
of NP/DAP despite shortage of raw material. Society has crossed the landmark sales and
transportation of over 112 lakh MT of fertilizers material registering a sharp rise of 20%
over the last year. With this, IFFCO has now become the largest marketer of process

14
fertilizers not only in India but in the entire world. Society has already achieved the sales
turnover of about Rs.32800 crore during the financial year 2008-09.

During the year 2008-09, the society has entered into a long term agreement with
LEGEND International for supply of rock phosphate along with equity stake. It has
initialed an MoU with Kazphosphate, a leading chemical and fertilizer manufacturing
company of Kazhakistan. Another agreement of intent has been signed with Qatar for
setting up a Urea plant.

CORPORATE SOCIAL RESPONSIBILITIES

In line with its vision and mission statement, IFFCO has undertaken several
social activities in the areas of education, community development, environment
protection and horticulture, health care/medical facilities etc, all with the intent of
reaching out to those in need and improving the quality of their lives. Adopting a village
is of paramount importance to IFFCO. The programme started with an objective to bring
about overall development in the living standards of rural community through integrated
rural development with particular emphasis on agriculture development, creation of
drinking water facilities, medical and veterinary check up. IFFCO has adopted 439
villages, thus empowering many lives.

Another scheme that benefits the farmers is Sankat Haran Bima Yojana, launched
by IFFCO’s subsidiary, IFFCO-Tokio General Insurance Company Limited (ITGI). Here,
farmers are provided insurance against accidents with the purchase of a 50 kilogram bag
of IFFCO fertiliser. This reaches out to member cooperative societies. The policy has
helped over 7,000 people since its inception in September 2001. ITGI also offers
customized policies for farmers such as Barish Bima Yojana, Mausam Bima Yojana and
Janta Bima Yojana.

IFFCO has initiated several promotional projects to provide greater opportunities to

the farmer by organizing field days, farmers meetings, sales point personnel training, crop
seminars, special agriculture campaigns to effect transfer of modern farming trends.
Besides, kits containing seeds, fertilisers, bio-fertilisers and agrochemicals along with

15
booklets/literature were distributed to farmers. The aim: enhancing crop productivity and
thus improving lives.

In keeping with its intent of empowering the weaker sections of society, including
women, IFFCO presents monthly scholarships to deserving students and also organizes
training programmes for women. The organisation has instituted 17 IFFCO Chairs at
agricultural universities and cooperatives. The emphasis is on current topics in agriculture.
IFFCO uses its 12 storage-cum-community Centres for helping people come together and
share their experiences.

The environment is a major concern with IFFCO. Its units and townships comprise
beautiful landscapes, surrounded by trees. IFFCO is also committed to improving the
safety, health and environment of its manufacturing units, in line with international norms.
The Kalol, Phulpur, Aonla and Kandla units have been awarded the ISO- 14001 certificate
for Environment Management System. Further, the Kalol, Phulpur and Aonla plants have
received the ISO-9001 certification for Quality Management.

IFFCO has contributed Rs 10 crore to set up the IFFCO Kisan Sewa Trust. This
Trust assists farmers in getting medical treatment. Employees also contribute regularly to
it. The Kisan Sewa Trust organizes cancer detection and eye camps and arranges for blood
through the Red Cross Society.

The IFFCO Foundation has been promoted as the think tank of the organisation. Its
objective is to focus on strengthening village level cooperatives in harmony with the law
and culture of the country.

Indian Farm Forestry Development Cooperative Limited (IFFDC), promoted by

IFFCO, was given a certificate of appreciation by the Tata Energy Research Institute for
its efforts towards good corporate citizenship. The Cooperative Rural Development Trust
provides practical training to farmers and has organized 229 programmes in 2008,
benefiting 22,221 farmers.

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INFORMATION AND COMMUNICATION TECHNOLOGY

IFFCO is taking measures to develop web based services to provide exhaustive

information on agriculture, fertiliser industry, agro-chemicals, and information on
cooperative sector. For this purpose, 108 touch screen monitor based Farmers Information
Kiosks or Cyber Dhabas in 10 languages have been installed in 17 different states of the
country. Besides that, IFFCO has developed and implemented several ERP solutions and
e-commerce solutions for internal use as well as for use in its joint projects.

Some of these solutions have got recognition by Indian as well as by International

Media Groups.

During 2008-09, IFFCO has undertaken enhancement of WAN & Network security
for all the plants and marketing offices across the country. Symantec antivirus server has
been consolidated and clients installed on all the machines across the country for
protection against virus attacks.

In short, we can say that:

IFFCO IS:

1. Largest producer of fertilisers in the country

2. No. of Plant Locations : Five
3. Installed Annual Capacity (‘000 MT)
a. UREA - 4242.2
b. NPK/DAP - 4335.4
c. TOTAL ‘N’ - 2628.2
d. TOTAL ‘P2O5 - 1712.8

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4. Only Fertiliser Institution in the country to produce 68.47 lakh MT of fertilisers
and 93.24 lakh MT of sales during 2007-08.

5. Contributed about 20% to the total ‘N’ and 25% to the total “P2O5” produced in
the country during the year 2007-08.
6. Fertilisers marketed through 39564 Cooperative Societies and 158 Farmers
Service Centers.
7. Service to the Farmers through a variety of programmes.

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OBJECTIVES OF THE COMPANY
The broad objectives of setting up this venture:-

1) Producing fertilisers.
2) Promoting the fertilisers distribution system in the co-operative sector.
3) Ensuring availability of fertilisers at the farmer’s doorstep.
4) Creating scientific awareness among farmers.
5) Promoting nation’s growth through modern farming techniques.
6) Improving agricultural productivity through balanced fertiliser application.
7) Strengthening cooperation distribution system.
8) To promote the activity for enriching the life of the rural.
9) To achieve self reliant and self generated economy.

IFFCO has grown steadily since its inception today. It has emerged not only as
the largest fertiliser producing organization in India but also Asia’s largest fertiliser
co-operative.

Prices of IFFCO's Fertilisers

(Applicable only within India)
(Indian Rupees Per Tonne w.e.f 31-04-2010)

UREA NPK DAP MOP

N-46% 10-26-26 12-32-16 20:20:00 18-46-0 K-60%

M.R.P. 5310 7897 8335 6895 9950 5055

Local Taxes Extra, where ever applicable.

MANAGEMENT

19
 The Representative General Body (RGB) which is the General Body forms the
supreme body that guides the various activities of IFFCO. The RGB consists of:

1. Members of the Board of Directors.

2. One delegate from each of the Member Societies holding shares of the value of
Rs.100 thousand and above; such delegate shall be as per the provisions of the
Multi-State Cooperative Societies Act/Rules as amended from time to time;

3. Delegates to be elected from amongst the representatives of Member –Societies

(other than Members holding shares of the value of Rs. 100 thousand and above )
in each State/ Union Territory at the rate of one delegate for every 200 societies or
part thereof. However the maximum number of such delegates from any
State/Union Territory at the rate of one delegate for every 200 societies or part
thereof shall not exceed 25. Such elected delegates shall be as per the provisions of
the Multi-State Cooperative Societies Act/ Rules amended from time to time.

The Board of Directors of IFFCO carry out all functions as specified under the
Multi-state Cooperative Societies Act/Rules. The Board of Directors frame
policies, direct the various activities of the Society and undertake any other
activities conducive to overall growth and development of Societies. The Board is
headed by the Chairman.

The Managing Director is the Chief Executive of the organisation with

responsibilities for general conduct, supervision and management of day to day
business and affairs of IFFCO. The The Finance Director oversees the financial
aspects and the Marketing Director looks after the marketing functions of IFFCO.
The Director (Technical) looks after the Techincal aspects, Director (HRD) is
responsible for all the Human Resources, Director (Joint ventures) oversees all the
Joint Venture operations and Director (Coop. Development) looks after Cooperative
Development. These functional directors are assisted by Senior Executives who are
experts in various disciplines.

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BOARD OF DIRECTORS

The Directors of IFFCO

Chairperson – Shri Surinder Kumar Jakhar

Vice-Chairperson- Shri N.P. Patel

DIRECTORS

Shri Chandra Prakash

Shri S.L. Dharme Gowda
Shri Kartick Chandra Sarkar
Shri Harminder Singh Jassi
Shri M.Gopal Reddy
Shri Ankushrao R.Tope
Shri Rajhans Upadhyaya
Shri G.C. Maikota
Shri Vithalbhai H. Radadia
Shri Sheesh Pal Singh
Shri Raj Kumar Tripathi
Shri Balvinder Singh Nakai
Shri Ravindra Pratap Singh
Shri K. Srinivasa Gowda
Shri K. Somashekhar Rao
Shri Simachal Padhy
Shri Pramod Kumar Singh
Shri R.K.Dhami
Shri B.S.Vishwanathan

Managing Director – Dr. U.S. Awasthi

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Joint Managing Director-cum-FD – Shri Rakesh Kapur
Director (Coop. Development) – Dr. G.N. Saxena
Executive Director (HRD) – Shri R. P. Singh
Director (Joint Ventures) – Mr. K.L. Singh

Executive Director (Tech.) – Shri A K Singh

BANKERS
India Overseas Bank

State Bank of India

Bank of Baroda

Standard Chartered Bank

The Maharashtra State Co-operative Bank Ltd.

The West Bengal State Co-operative Bank Ltd.

Madhya Pradesh State Co-operative Bank Ltd.

The Karnatake State Co-operative Bank Ltd.

The Punjab State Co-operative Bank Ltd.

The Hongkong and Shanghai Baking Co-operation Ltd.

ICICI Bank Ltd.

IDBI Bank Ltd.

IFFCO’s MAIN AIM

22
“Strengthening management and participatory character of the Indian Cooperative
Movement by using duly tested and appropriate consultancy, advisory and technological
interventions sourced from within the country and abroad and in accordance of the
Cooperative Principles and in harmony with the law and culture of the land.”

VISION

“To augment the incremental incomes of farmers by helping them to increase their crop
productivity through balanced use of energy efficient fertilisers; maintain the
environmental health; and to make co-operative societies economically and
democratically strong for professionalized services to the farming community to ensure an
empowered rural India.”

MISSION
IFFCO’s mission is “to enable Indian farmers to prosper through timely supply of reliable,
high quality fertilisers and farm inputs and services in an environmentally sustainable
manner and to undertake other activities to improve their socio-economic status.”

1) To provide to farmers high quality fertilisers in right time and in adequate

quantities with an objective to increase crop productivity.
2) To make plants energy efficient and continually review various schemes to
conserve energy.
3) Commitment to health, safety, environment and forestry development to enrich the
quality of community life.
4) Commitment to social responsibilities for a strong social fabric.
5) To institutionalize core values and create a culture of team building, empowerment
and innovation which would help in incremental growth of employees and enable
achievement of strategic objectives.
6) Foster a culture of trust, openness and mutual concern to make working a
stimulating and challenging experience for stakeholders.

23
 7) Building a value driven organization with an improved and responsive customer
focus. A true commitment to transparency, accountability and integrity in principle
& practice.
8) To acquire, assimilate and adopt reliable, efficient and cost effective technologies.
9) Sourcing raw materials for production of phosphatic fertilisers at economical cost
by entering into joint ventures outside India.
10) To ensure growth in core and non-core sectors.
11) A true co-operative society commitment for fostering co-operative
movement in the country.

Emerging as dynamic organization, focusing on strategic strengths, seizing

opportunities for generating and building upon past success, enhancing earnings to
maximize the shareholder’s value.

VISION 2010

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Having accomplished the objectives envisaged in “vision2000”and”mission-2005” IFFCO
embarked on “vision2010” which focuses on future growth and development of the
society and aims at:

1. Attaining an annual turnover of Rs.15,000 crore by 2010.

2.Installation of Ammonia and Urea plants including acquisition of fertiliser units
3.Backward integration to meet feed stock requirements such as Phosphoric acid,
Natural gas etc.
4. Generation of Power
5.Production and marketing of micro-nutrients, seeds, bio-fertilisers, pesticides etc.
6.Value addition to agri-products and marketing
7.Information technology and IT enabled services
8.Easblishment of retail chain in urban and semi-urban locations.
9.Diversification into new growth areas such as mobile telephony and communication
Technology in the rural areas.

Under Vision 2010,IFFCO has set up a power generation company in Chattisgarh and
formed a joint venture to manufacture Phosphoric Acid in Egypt

APPROACH
To achieve our mission, IFFCO as a Cooperative society, undertakes several activities

25
 covering a broad spectrum of areas to promote welfare of member cooperatives and
farmers. The activities envisaged to be covered are exhaustively defined in IFFCO’s Bye-
laws

COMMITMENT
Our thirst for ever improving the services to farmers and member co-operatives is
insatiable, commitment to quality is insurmountable and harnessing of mother earth’s
bounty to drive hunger away from India in an ecologically sustainable manner is the
prime mission.

All that IFFCO cherishes in exchange is an everlasting smile on the face of Indian
Farmer who forms the moving spirit behind this mission.

BUSINESS PRINCIPLES OF THE COMPANY

• Appreciation of national need of generation upto optimum return of investment.

• To fair price of the product manufactured by the company is subsidy to the

farmers.

• Total consumer satisfaction as a quality of the product, price of the product and
better service after selling the product.

• Effective management information system.

• To increase the efficiency of the workers.

• To maintain better human relations and discipline among all the employees.

• To develop good relation with customers.

26
 IFFCO’S EMBLEM
The Emblem of any organisation i.e. the logo is very important by which the
company is known to everyone or that is identity of the company. After one year of
establishment in 1968, the organisation has decided to make an EMBLEM of IFFCO. The
executive of the company said that which can be easily fit into any place or easily
changeable according to the place and made by simple geometrical method. So the
EMBLEM is made by Mr. M.I. Gupta, Chief Visualiser Developer and looks like

Logo’s ratio is1:2:5 and the color is green. The rectangle shows that the Indian
economy is depend upon the agriculture and green color shows the faith of the farmers,
they believe that after using the urea their fields will always be green, the remaining white
color shows that the quality of the IFFCO’s product is very good and oval shape is meant
for the wealth and prosperity.

ORGANISATION CHART OF IFFCO

27
 Board of Directors

Chairman & Vice Chairman

Managing Director

Dy.MD-cum- Dy.MD-cum- Director Director Director.

Mkt.
Finance (Technical) (HRD) (Coop.
Director Director Development)

28
29
 Provisional highlights of IFFCO performance during 2008-09.

Highest Production of Fertilisers 71.68 lakh MT

(Previous Best 70.12 lakh MT in 2006-07)

Highest Production of Urea 40.68 lakh MT

(Previous Best 39.63 lakh MT in 2007-08)

Production of NPK/DAP/NP 31.00 lakh MT

(Best 32.26 lakh MT in 2006-07)

Highest Sales of Fertilisers 112.33 lakh MT

(Previous best 93.24 lakh MT in 2007-08)

Highest Sales of Urea 58.49 lakh MT

(Previous best 54.29 lakh MT in 2007-08)

Highest Sales of NPK/DAP 53.84 lakh MT

(Previous best 38.95 lakh MT in 2007-08)

Highest Turnover Rs 32800 crore

(Previous best Rs.12163 crore in (2007-08)

Plant Productivity
(Best 1669 MT in 2005-06) 1376 MT per employee

Highest Marketing Productivity 7380 MT per employee

(Previous best 6158 MT in 2007-08)

Composite Energy Consumption 5.9433 Gcal/ MT

Lowest 5.907Gcal / MT in 2007-08)

30
IFFCO ASSOCIATES

1. INDUSTRIES CHIMIQUES DU SENEGAL

2. OMAN INDIA FERTILISER COMPANY S.A.O.C.

31
 3. INDIAN POTASH LTD.

4. NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD.

5. NATIONAL COLLATERAL MANAGEMENT SERVICES LTD.

6. COOPERATIVE RURAL DEVELOPMENT TRUST

7. KISAN SEWA TRUST
8. IFFCO FOUNDATION
9. LEGEND INTERNATIONAL HOLDINGS INC

AWARDS GALORE

KALOL UNIT

1) Seven awards received for overall performances from FAI.

2) Two awards for industrial safety from GOI.
3) Award for technical innovation from FAI.

32
4) Two Rajya Bhasha Shield for promoting Hindi.
5) Award for safety from National Safety Council, Chicago.
6) Indo German greentech environment excellence award.

PHULPUR UNIT

1) Four awards for productivity from NPC.

2) Six national safety’s award from GOI.
3) Two awards for overall performance from FAI.
4) Two awards for technical innovation from FAI.
5) FAI’s Award for Best Overall Performance of an operating fertiliser unit for Nitrogen
(Ammonia and Urea) Plant jointly with Zuari Industries Limited, Goa.
6) Three national energy conservation awards.
7) Three awards for best environmental protection from FAI.
8) Best environmental excellence awards from Indo German green tech foundation.
9) Best technical paper award by FAI.

KANDLA UNIT

1) Twelve safety awards from national safety council Bombay GOI.

2) Twenty-three safeties award from Gujarat.
3) Raj Bhasa award for promoting Hindi.
4) Six awards for overall performance from FAI.

AONLA UNIT

1) Award for best implemented project ( 2nd price) from GOI.

2) Award for conservation of energy from GOI
3) National Award for “Excellence in Energy Management”
4) C Indo German and Greentech Environment Excellence Award
5) C Award for Best overall performance from FAI

33
 6) C Two Awards for Excellence in Safety from FAI
7) C Two Safety Awards from National Safety Council of India
8) C Rajiv Ratna National Gold Award 2005 for Best Executive
9) C Excellence Award for papers published on “Safety and Health in
Chemical Industry” and “Hazard Identification & Risk Management

10) National energy conservation award 2006

11) Golden Peacock Environment Management Award 2008

ABOUT AONLA UNIT

LOCATION

State Uttar Pradesh

State Capital Lucknow

Distance from Lucknow 280 Km.

Distance from New Delhi 260 Km.

Nearest Airport New Delhi

34
Railway Station Aonla (10 Km. From the Plant)

Road Plant is In Bareilly–Aonla Bareilly highway.

Area under Plant 260 Hectares

Area under Township 220 Hectares

YEAR OF COMMISSIONING: : 1988

INVESTMENT : Rs.651.6 Crore AONLA- I

YEAR OF EXPANSION : 1996

INVESTMENT : Rs.954.7 Crore AONLA- II

YEAR OF DEBOTTLENECKING: 2008

INVESTMENT : Rs.149.2 Crore

PRODUCT CAPACITY TECHNOLOGY

TPD TPA

AMMONIA 3480 11,48,400 HALDOR TOPSOE

UREA 6060 19,99,800 SNAMPROGETTI

‘N’ 2788 9,19,908

The IFFCO AONLA Unit is located in the Gangetic Plains of Uttar Pradesh in
Bareilly district about 28 Km. Southwest on Bareilly-Aonla Road. It was set up on 08

35
January 1985 and started commercial urea production at 16 July 1988. The infrastructure
of AONLA unit is very big and constructed on 713 acres of land.

IFFCO Aonla unit is the most efficient and quality-wise as well as environmental
oriented unit so that M/s KPMG Peat Marwick, a quality registrar has certified it as ISO:
9002 unit and M/s BVQI London has accredited it as ISO:14001 unit. The Aonla unit, an

Ammonia- urea complex is comprised of the two phases:

AONLA-1

AONLA-2

AONLA -1 was established in 1988 and it was digested to nation by honourable

Prime Minister of India late Shri Rajeev Gandhi on 17 May 1989.

AONLA-2 was established in1996 December. This unit was designed to nation by
honorable Prime Minister of India Shri I.K. Gujral on 28 Jan 1997.

SALIENT FEATURES OF AONLA UNIT

Particular Aonla-1 Aonla-2

Capacity (P.A.)

Ammonia 4,45,500MT 4,45,500MT

Urea 7,26,000MT 7,26,000MT

Project zero date 08.01.1985 30.09.1993

Mechanical completion 08.01.1988 30.11.1996

36
Ammonia production 15.05.1988 15.12.1996
started

Urea production started 18.05.1988 26.11.1996

Feedstock Natural gas Natural gas with Naphtha

(Natural Gas from HBJ pipeline being supplied from Bombay high)

Capacity Enhancement of Aonla and Phulpur Units

IFFCO has submitted the Techno-Economic Feasibility Report (TEFR) for

Capacity Enhancement of Aonla and Phulpur Unit to the Department of Fertilisers (DOF).

Following enhancement in capacity has been envisaged with a total annual increase in
Urea Capacity by 5.115 lakh MT:

Name of Unit Present Capacity Proposed Increase in

Capacity (MTPD) Capacity (MTPD)

37
 ( MTPD)

Phulpur-1 1670 2080 410

Phulpur-2 2620 3000 380

Aonla-1 2620 3000 380

Aonla-2 2620 3000 380

Total 9530 11080 1550

The installed cost for the Enhanced Capacity is estimated at about Rs. 19 lakh per MTPD
of Urea as against the Rs. 65-70 lakh per MTPD Urea in case of a Grassroots Plant.
Therefore De-bottlenecking of existing Urea Units is the best route to create additional
Urea capacity.
IFFCO has initiated action for De-bottlenecking of its plant at Aonla and Phulpur
Units for Capacity Enhancement. We are awaiting final clearance from DOF. Incidentally
this will also reduce the subsidy to Government vis a vis imported Urea.

PLANTS OF AONLA UNIT

There are mainly four plants in the unit namely:

1. Ammonia Plant

2. Urea plant

3. Product Handling Plant

4. Steam and Power Generation Plant

1. AMMONIA PLANT

38
 There are two streams of Ammonia plants having the capacity to produce 2x1520
MTDP of liquid ammonia. The technology is based on Haldor Topsoe, Denmark process
with Natural Gas and Naphtha as main raw material.

2. UREA PLANT
There are four streams of Urea Plant having the capacity to produce 4x1310 MTPD
OF Urea Fertiliser. The technology is based on Snamprogetti, Italy on Ammonia stripping
process.

3. PRODUCT HANDLING PLANT

Product handling plant is composed of Urea storage known as Silo and packing and
transport activities. Two silos of 45,000 and 30,000 MT capacity have been provided to
Urea product to ensure continuous urea production even if it is not taken off due to non-
availability of rail wagons or seasonal demand fluctuations.

4. STEAM AND POWER GENERATION PLANT

To meet the continuous power supply needs of the main plants, captive power plant
and stem generation facilities have been provided. In this plant, two gas turbines each
having the capacity of 18MW along with heat recovery steam generation unit has been
provided to cater to the plant needs of power and steam. Additionally, HRU unit of
Ammonia –II add to the steam supply of the complex.

ORGANISATION CHART AT AONLA UNIT

Sr. General Manager

General Manager General Manager

JGM/DGM JGM/DGM JGM/DGM JGM/DGM JGM/DGM JGM/DGM

Production Maint. Technical Utility Comm. F&A

39
Ammonia Mechanical Process Power Plant Purchase F& A

Plant

Urea Plant Electrical Design & Offsite Store

Drawing

Product Instrumental

Handling Library &

Document
Civil
Fire & Safety

& Env. Laboratory

Traffic Training &

Development

General

Engg.
JGM/CM
JGM/CM

Finance & Accounts Department At A Glance

The Finance & Accounts Department of IFFCO, Aonla is divided into 5 sections, to
facilitate smooth and easy functioning and control.

Organisation Structure

FINANCE & ACCOUNT

DEPARTMENT

40
BOOKS/FICC FINANCIAL BILL PAYROLL & TAXATION PSL
CELL CONCURRENCE SECTION SECTION SECTION

Supply Note Sheet Work Order

Section Payment

Indigenous Imported Work Service

supply supply contract contract

Line of Control in Finance & Account Department

HOD

JGM/DGM (F & A)

Chief Manager Chief Manager

(F& A) (F& A)

Sr.Manager Sr.Manager Sr.Manager Sr.Manager

(Account) (Account) (Account) (Account)

41
Manager Account Manager Account Manager Account Manager Account

Deputy Account Manager

Sr. Account Officers

Account officers
Jr. Account Officer
Sr. Accountant
Jr. Accountant

FINANCE AND ACOUNTS DEPARTMENT

Each company is carried with a purpose of earning money. Money or capital

being a scare as well as crucial resource in the working of any organization needs to be
given prime importance. The financial resources have been planned and controlled in a
proper and continuous manner. As among the most crucial decisions of a firm are those
which relate to finance. Finance & accounts from an integral part of any organization.
Proper and smooth functioning of this section is very vital for the organization to survive
and grow.

42
Finance functions are of two types:

 Managerial finance function

 Routine finance function

Managerial finance functions are so called because they require skilful planning,
control and execution of financial activities.

Routine finance functions on the other hand, do not require a great managerial
ability to carry them out. They are chiefly and are incidental to the effective handling of
the material finance functions.

The various areas covering under the preview of subsections are as follows

1. BOOKS SECTION

This section basically deals with accounting function, maintenance and keeping of
records.

The various functions include:

 Books: Preparing and maintaining balance sheets.

 IFCC (Fertiliser Industries Coordination committee)
 Costing & Pricing Cells
 Reporting

2. PAY ROLL SECTION

This section deals with the payments of salary and wages to the employees and
extending various other benefits are covering under to preview are –

 Salary

43
 Leave Travel Concession (LTC)
 Medical Allowance
 Conveyance
 Advances
 Loans to employees

Aonla Unit undertakes processing of salary and other staff related payments of all
employees through Human Resource Management System (HRMS). It is an integrated
package based on Oracle DBMS. The System integrates Personnel & Administration
Department and Finance & Accounts Department.

Simultaneously, Financial Accounting System (FAS) which is also based on

Oracle DBMS has been launched in F&A DEPARTMENT through which General Ledger
Sub Ledger of Employees is maintained and Trial Balance and Financial Accounts are
generated. There is also inter- relation of HRMS and FAS so that cash payment/receipt
vouchers, Bank Payment Vouchers and Journal Vouchers generated in HRMS are
automatically posted online to Payroll Section of Finance & Accounts Department.

Taxation Section
As per the status and operations of the society, It deals with the following Taxes:-

 Central Excise Duty

 Income Tax
 Service Tax
 Sales Tax

Central Excise Duty

As we know that this duty is charged by Central Government on the goods

manufactured. IFFCO mainly produce ammonia and urea at Aonla plant. So duty on
ammonia is charged. In this relation monthly production report is prepared and all

44
documents and accounts are prepared by the Finance & Accounts Department. The duty is
deposited in the Government bank account on the 5th day of the month.

EXCISE Duty is not charged on production of Urea.

CONCEPT OF INVENTORY MANAGEMENT

Dictionary meaning of inventory is “detailed list of movable articles”. The

literary meaning of inventory is stock of goods. According to International Accounting
Standards-2, inventory is a tangible property which is held:

 For sale in the ordinary course of business;

 In the process of manufacture for such a sale;
 For consumption in the process of production of goods and services for sale
including maintenance supplies and consumables other than machinery spares.

45
 Inventory Management involves the control of assets being produced for the
purpose of sale in the normal course of the company's operations. The goal of effective
inventory management is to minimize the total costs - direct and indirect - that are
associated with holding inventories. However, the importance of inventory management
to the company depends upon the extent of investment in inventory.

The term ‘inventory’ includes:

 Inventory of Raw Materials :

In the case of manufacturing concerns, various types of raw materials are
being used in the production system. To ensure smooth production function and also
to avoid any kind of production delays the concern has to keep inventory of raw
materials.

 Inventory of Stores and Spare Parts :

This inventory consists of those products which serve as accessories to the
main products manufactured for the purpose of sale. Bolts, nuts screws, clamps, etc.,
are the examples of stores and spares parts. Such spare parts are either bought from
outside or manufactured in the concern itself.

 Inventory of Work-In-Process (W.I.P.) :

Sometimes the manufacturing system involves various processes for
converting raw materials into finished goods. As such, some materials might have
been issued to the production process but might not have been completed as finished
goods. This is known as work-in-process.

 Inventory of Finished Goods :

All goods manufactured during a particular period may not be sold
immediately. These are to be kept in warehouse. The idea is to uncouple the
production and sales function so that it is no longer necessary to produce the goods
before a sale can occur.

46
 The application of managerial function on the basis of management principles in
the field of inventory is termed as inventory management. Managerial functions are
performed with respect to inventory; it may be called inventory management.

The objective of inventory management is to plan the optimum size of inventory

which is neither excessive nor deficient and is timely available. For timely availability
along with optimum size, there is need for controlling as well. Only on the basis of
various control techniques one can ensures whether inventory would be timely available.
But effective control in itself depends upon organizing and coordination. Thus, inventory
management comprises the functions of planning, controlling and organizing the types of
all goods, quantity, status, flow and time- sequence etc.

Need for inventory management

Inventory management is an integral part of general management. Three important

functional aspects of a business are closely related to inventory management. These are:

1) Production management
2) Marketing management
3) Financial management

47
 Here the production management and marketing management are related to the
physical aspect of inventory management and; financial management is concerned with
the financial aspect of the inventory management.

In production management, production manager will always strive to have a large

inventory of raw materials and of such a good quality as to ensure stable production
operations.

In marketing management, marketing manager aims at satisfying ever increasing

demands for improved customers’ service by having large inventory of inside goods.

In financial management, finance manager will effort towards to keep investments

in different types of inventory at a minimum possible level so that the business concern
may earn maximum return.

MATERIAL DEPARTMENT

Material Department is responsible for the proper handling of inputs and

controlling of material inputs. Proper handling of input materials ensures the smooth
running of plant. Material department recognizes the need of the input materials and
arranges them for the plant. It includes the procurement, verification and controls of
materials in right quantity and at right time to facilities the production function.

48
Material management includes two important functions:

• Purchasing
• Storing and control of materials
That’s why; it is divided into following sections:

• Purchase section ( It is responsible for purchasing of materials )

• Store section ( It stores the inputs)

These both sections are interrelated and perform their function on coordination.

All purchases are to be made only by the materials department except purchases of petty
item through some vouchers and Department Managers within the limits prescribed in
purchase procedure/power of officer. Material purchase indent should give following
information:

1) Quantity in stores

2) Average monthly consumption since last purchase for stock items

3) Maximum /minimum level

4) Last purchase order reference

5) Reorder level

PURCHASE SECTION

The purchase department is at the interface of internal and external department.

Purchase department do enquiry about the inputs whether it is required or not. This
enquiry is done in two ways that are:

1) Single stage

2) Two stage

49
 After enquiry purchase department invites a tender. After confirmation of all terms
and conditions the department contacts the supplier and orders for the inputs. Thus it is
responsible for purchasing of materials and other raw materials whatever is required by
the organization. Purchase department is responsible for the delivery of right amount of
material at the right time and at the right location to avoid the hampering of the
production.

Purchasing is distinct from buying. Purchasing involves the extra knowledge as the
tenders, various vendors, their prices, comparison between them, after sale service,
dispatching follow up and payment terms.

The purchase department considers various things before purchasing the raw materials.

1. Information about the input material

2. Sources of material- vendor

3. Reasonable price of that material

4. All terms and conditions

Indenter is that person who raises the indent.

PURCHASE PROCESS

The purchase process can be expressed as following:

INDENTER

50
 Material Purchase Requirement (MPR)
Single stage
Enquiry Two stage

E- Procurement Manual
(15 days) (21 days)

Opening

Quotation Comparative Statement (QCS)

Technically Acceptable L-1 Bidder

Order
(With approval of competent authority)

The diagram can also be summarized as follows:

1) RAISING OF INDENT: First of all the indenter raises the indent. This
indenter may belong to any department. Now the indenter informs to the store. If that
particular material is not available at the particular point of time then store informs to
the purchase department. After it the working of purchase department starts.

2) RECOGNITION OF NEED: The purchase department recognizes the

need of indenter and checks whether that material is available in the store or not. The

51
availability of input material at all points of time is the responsibility of purchase
department.

3) REQUISITION TO PURCHASE: This is an intimation to purchase

department by the indenter that he has need of certain materials. He raises indent by
filling a form ‘Material Purchase Requisition’ (MPR). For stock items MPR is raised
by store keeping in view maximum, minimum & re-ordering lable. In this he gives
several information like:-

a. Material description/ Proposed Reason

b. Item code/ proposed code

c. Unit

d. Quantity required

e. Value

f. Budget code

g. MPR No.

h. Indenter

PAYMANT AGAINST PURCHASE:

There are various modes of payment through which payment is done:

1. Advance payment to supplier :

If both the parties are agreed upon advance payment that is specifically provided
in the contract order, only then advance payment is given. The advance payment to

52
 contractors shall be made against submission of bank guarantee in the Performa
provided by IFFCO. Advance payment against indemnity bond shall not be released as
provided in the purchase procedure.

2. Full payment / 90% to 95% payment :

In case the terms of payment provide for full payment or part payment against
dispatch documents through bank, the supplier will be negotiating the documents through
the bankers. After the documents are received by the bankers, they are forwarding bank
intimation along with a copy of the purchase order to ascertain that the invoice is raised
for the material ordered and conforms to the other terms and conditions of purchase order.

After the intimation from the bank is received the invoice of the suppliers will be
scrutinized by the Finance and Account Department for the following-

i. Purchase order number

ii. Whether materials supplied are as specified in the purchase
iii. Whether materials supplied are as specified in the purchase order.
iv. Quantity supplied.
v. Price basis whether F.O.R. or Ex-works
vi. Whether excise duty, sale tax and other taxes are as per the order.
vii. Whether bank charges are claimed as per the purchase order.
viii. Other terms and conditions of the purchase order.
ix. Document with bank for retirement should have consignee copy of GR.

Where there is delay in supplying the material and the payment through bank is
90% to 95%. It should be ensured that penalty for delay, as provided in the purchase
order, is recovered before releasing the balance payment. Where payment required to be
made, a clarification is to be sought from materials department and proper approval taken
for waiving of penalty or otherwise before retiring documents.

53
 The payments under the contracts must be regulated as per the expressed terms
and conditions. Any payment not covered by the contractual terms and conditions should
not be released.

3. Full payment / Balance payment after receipt of materials :

In case the purchase order provides the 100% payment after receiving of
materials and accepted payment is to be released after the SRV is received from the stores
department. In case 95% or 90% released against document retired from bank then the
balance payment can be released after receipt of SRV from store, which confirms that the
material has been accepted after inspection and taken on charge.

Before released of the payment, the invoices should be scrutinized as the case of
payments released through bank. In addition it should also be verified whether all the
items invoiced have been received, inspected and accepted as per the SRV.

IMPORTED MATERIAL

Materials procured may be either indigenous or imported. For major projects the
foreign contracts are normally finalized at head office level and payment against these
contracts are made by the concerned unit. Orders are also placed by the unit directly.
Payment is made to the foreign party by debiting to the appropriate advance account. If

54
the payments are made through L/C against documents, the same shall be debited to
advances to foreign suppliers account. On receipt of material at site, project engineer shall
accept the material and initiate for preparation of DCSRV/SRV. After receiving
DCSRV/SRV project accounts will clear the supplier’s advance account for material.

Clearing and handling of imported material is the responsibility of material

department on the arrival of ship the materials will be cleared with reference

MATERIAL CODING
It is very typical for the every organization to maintain the stock items in case of
largenumber of items. It will be very typical to identify them at the time of requirement.
So the items are coded to avoid confusion. For the coding of materials the account person
assigns code for every item of store. Thus every item has a code that is called its material
code.

55
 Material coding facilitates the account persons and store manager to maintain the
transactions of the items whether of receiving or of issuing.

Every item maintained by its code in the stock as well as in the store accounting
section. The item/material code remains same in stores and accounting section. Whenever
a transaction is done in store for the inventories the full details of that transaction is send
to store accounting section also, because the computers of stores and accounting section
are connected through Local Area Network. (LAN)

In this way it is very comfortable task to maintain the inventories on the inventory
software with the help of material coding.

Advantages of codification
1. Lengthy descriptions are replaced by a simple code.
2. It economizes space in forms and reduces clerical work.
3. Ease in identification of stores.
4. It is comprehensive.
5. It facilitates, mechanized accounting.
6. Secrecy of description can be maintained.
7. It ensures clarity.

CODING

There are different types of coding that are as follows:

a) Numeric: Each item is given a number.

b)Alphabetic: Each item is denoted by a combination of alphabets. If the alphabet
selected indicates the inventory sound when it is pronounced, it is known as
mnemonic system. This helps in remembering the codes.

56
 c) Alphanumeric: It is a combination of alphabets and numeric code.
d)Decimal System: It is basically a numeric system; sub-group may be indicated by
decimals.

In IFFCO 12 digits coding is done.

The various codes for the different materials are as follows:
1. Ammonia – 11
2. Urea - 12
3. Offsite - 13
4. Product handling -14
5. Power plant -15

2 digits = for the plant location

3 digits = for the equipment
3 digits = for the material
3 digits = for the size and
1 digit = for the item identification.

Packing & Dispatch

All packing, boxing and protection shall conform to the specification or requirements
of the order. The supplier shall be held liable for the damage or breakage of the goods due
to defective or insufficient packing. It will be according to term and conditions that are
given already in the format.

57
 All goods shall be dispatched by rail/road freight paid and the railway receipt/lorry
receipt shall be posted to the concerned officer of IFFCO.

DOCUMENT REQUIRED FOR THE DISPATCH OF GOODS

Following documents are required for the dispatching of materials:

Challan 3 copies

Packing list 3 copies

58
Test certificate 3 copies

Railway/ Lorry/ Air 4 copies

Consignment note

Inspection of Material

The material department shall coordinate with other departments and arrange
inspection of material at vendor’s shop prior to dispatch. Inspection of materials in other
cases shall be carried out on receipt of materials at site. Only materials those cleared by
the inspection will be taken on charge in stores. The person inspecting the material will
sign

on the stores receipt voucher in token of having inspected and accepted the material.
Generally indenter is called upon for the inspection of the material.

Sometimes inspection is done at the gate of IFFCO. Only after inspection material
enters into the store. If there is any damage in the material or they are insufficient in
quantity then rejection report is prepared. Its copies are distributed among all the parties
which are involved in it.

Damaged/Short/Rejected Materials

If the materials are received short or in damaged condition, there are some
conditions in this regard.

 In cases where the responsibility for the transit insurance is on IFFCO, a claim should
be lodged with insurance company for the value of material plus incidentals. This
insurance is done by IFFCO TOKIO GENERAL INSURANCE COMPANY. As soon
as the shortage per damage of the materials is noticed the material department will
lodge the provisional claim with the underwriters and pass on the relevant papers to
the finance & accounts department for lodging monetary claim.

59
  In respect of transit insurance claims bill section will pass an adjustment
Entry debiting “claim recoverable account” and credit the “Advance to
Vendors account”. After the adjustments the bill section sent the copy of journal
voucher along with all necessary details such as P.O. No. , MRR No. quantity and
value, name of the supplier to the insurance section for following up the claim with
the insurance company.

 Where the responsibility for short supply or damages in transit is of the suppliers,
the material department should take up the matter with the supplier for arranging
replacement. A report is prepared in this case. Its copies are sent to the supplier,
purchase department and finance and account department.

Accounting of Raw Materials

Based on the projected consumption requirement of raw materials, the

procurement action is taken by the commercial department at the head office which is in
Delhi.

Described below is the accounting requirement of major raw material.

60
Imported Phosphoric acid and Ammonia

The consignment of phosphoric acid and Ammonia are received at Kandla and the
material actually received is valued at the contracted cost & freight price.

Where free on board (FOB) price is agreed, the ocean freight element is loaded
separately. All connected expenditure like customs duty; handling charges etc. are also
included in inventory valuation.

The valuation of inventory at the month end is to be made on the basis of exchange
rates prevailing on the last day of the month. The difference if any between the
provisional rate and the actual payment rate shall be charged off to the consumption
account, if the material is already consumed.

The account department also ensures that all claim suppliers for shortage are booked
on monthly basis and necessary on quarterly basis for the pending claims.

Indigenous Ammonia

The indigenous ammonia is supplied by KRIBHCO / GNFC to Kandla unit. The

quantity received is accounted at the price payable to the party which is fixed by the Govt.
of India. This price is fixed at par with the landed cost of imported ammonia.

Potash

Potash purchase orders are placed by the commercial department time to time
depending on the material requirement. The material received valued at agreed price plus
local sales tax and freight for transportation of material up to plant site.

The finance department at head office ensure that payment for these raw materials are
released on due dates to avoid interest liability. After releasing the payments the inter unit

61
debit advice is sent to plant. On receipt of the payment advices the supplier’s account is
adjusted in the plant.

Natural Gas

Kalol, Phulpur and Aonla plant consume as feed stock and fuel. As per the contract
with ONGC, gas is supplied to IFFCO at the price fixed by Govt. of India from time to
time.

The meters provided at the inlet point in the plants are the basis for monthly billing.
Meter reading is carried out jointly by ONGC / GAIL and IFFCO representatives. The
unit sends the e-mail to head office for making payment to ONGC / GAIL after due
certification of bill by the head of technical department about quantity of gas received.

Naphtha

Naphtha is supplied by IOC against advance payment terms. There are excise duty
concessions available for these items provided they are consumed for manufacture of
fertilisers. Accounts department in coordination with production department shall ensure
that all the excise duty requirements are fulfilled that the duty concessions are fully
availed. The inventory is valued based on the quantity received as per MRR received from
production department on monthly basis. The price payable to IOC for naphtha is fixed by
the Govt. from time to time. The naphtha is supplied by IOC from its refiners located at
Mathura, Koyli, BRPL, Panipat & Bagoun to Kalol, Phulpur & Aonla units.

Catalysts & Resins

The Catalysts & Resins are produced by the material department at the plant; on the
receipt of the material the inventory is valued at the agreed price. For Catalysts & Resins
where IFFCO has pooling arrangement with other companies, the material received is
taken to inventory at the actual price paid and equivalent amount is credited to “material
received on loan account”.

62
 This entry will be reverse when the material is procured by IFFCO and replenished
for return of loan. The inventory and consumption account then shall be accounted at the
actual procurement price.

63
 STORE SECTION

Store of any organization is of vital importance. It is the responsibility of stores to

receive the material required by the organization’s operations to keep it properly & to
issue it as when required. The stores are divided in two subsections for greater flexibility
like receipt and custody section. In IFFCO there are two stores.

a. Store A for Aonla-1( this store contains that spares which are used by Aonla-1)

b. Store B for Aonla-2 unit.( it contains mainly catalysts used by Aonla-2 )

Store has the following warehouses:

• Main Store
• Cement godown
• Petrol Pump
• Cable yard
• Chemical godown
• Paint godown
• PDIL store

64
Verification of Inventories

The officer of stores will coordinate the job of physical verification and the
accounts officer in charge shall render all assistance to ensure that the physical
verification of inventories is carried out as per the policy and the policy and the approved
program. The store department will ensure that the posting in the Kardex are updated
before the verification of inventories. Kardex contains all the information that is in the
store.

The inventories are classified in three categories for verification purpose.

• Raw material & Packing materials

• Stores, Chemicals & Spare parts
• Finished products

The stocks of raw materials, packing materials and finished products are to be
verified on quarterly basis by an independent surveyor by the society. No adjustments
need be carried out in the books of accounts unless the discrepancies in liquid raw
materials and solid raw material are in excess of 1% to 5% respectively. This is as per
guidelines issued by the head office.

In case of finished goods also the same principle applied except that no adjustments
in the books of accounts shall be made. However the stock registers shall be adjusted on
the basis of actual stock in order to replace the notional figures of stocks by more accurate
estimate based on physical verification.

The inventories for other items such as stores, spares, construction materials etc. are
also verified every year keeping in view ABC analysis of stock items value and exercise
of verification may be completed by March every year.

65
 For the purpose of verification of stores, chemicals & spare parts shall be classified in
to A, B, C categories.

Categories Value (Rs. per unit) Quantum of Verification

A Above Rs. 50,000/- 100%

B 10,001 to 50,000/- 70%

C Below Rs. 10,000/- 25%

A team of stock verifiers shall prepare a stock verification sheet giving the
kardex balance and the physical balance of each item covered in the stock verification.
After filling up the particulars of the value and quality discrepancies with reference to the
priced stores ledger balance, the stock verification sheets shall be forwarded to the
materials department for scrutiny and reconciliation and adjustment in consultation with
finance department accepted shortage shall be processed for the approval of the competent
authority.

RECONCILIATION AND ADJUSTMENT

After each physical verification by the custodians of inventories and suitable

adjustment action has to be taken. It is desirable to complete the physical verification
work by March every year so that reconciliation/adjustment action can be completed
within the year itself.

Internal Check

1) One set of document for receipts, issues and return of materials shall be sent to the
accounting section of finance department. Based on these documents, priced store
ledger shall be prepared for each item for stores. The material code number between
stores and accounts shall be identical. The priced store ledger shall provide value of
each receipt, Issue and return transaction along with quantity ledger. The quantity
balance appearing in priced store ledger shall serve as counter check for accuracy of

66
 bin card balance in store which is essential for proper functioning of inventory control
system

2) The priced store ledger shall not be maintained for large number of low value
items such as stationery, medicines, canteen stores etc. in this case the expenditure
shall be charged to the appropriate expense account at time purchase. Quantitative
record shall be kept by the concerned department and shall be produced as and when
required for audit purpose.

Inventory Control

Inventory control is concerned with minimizing the total cost of inventory. The
three main factors in inventory control decision making process are:

a. The cost of holding the stock (e.g., based on the interest rate).
b. The cost of placing an order (e.g., for row material stocks) or the set-up cost of
production.
c. The cost of shortage, i.e., what is lost if the stock is insufficient to meet all
demand.

The third element is the most difficult to measure and is often handled by
establishing a "service level" policy, e. g, certain percentage of demand will be met from
stock without delay.

The Inventory Management system and the Inventory Control Process provides
information to efficiently manage the flow of materials, effectively utilize people and
equipment, coordinate internal activities, and communicate with customers.
Inventory Management and the activities of Inventory Control do not make decisions or
manage operations; they provide the information to Managers who make more accurate
and timely decisions to manage their operations.

67
 Inventory control is a systematic control and regulation of purchase and usage of
materials in such a way so as to maintain an even flow of production at the same time
avoiding excessive investment in inventories. Efficient material control reduces losses and
wastage of materials that otherwise pass unnoticed.

Inventory control is the core of material management. The need and importance of
inventories varies in direct proportion to the idle time cost of men and machinery, and
urgency of requirements. If men and machinery in the factory could wait and so could the
customers, materials good not lie in want for them and no inventory need to be carried.
But it is highly uneconomical to keep the men and machine waiting and the requirements
for modern life are so urgent that they can not wait for materials to arrive after the need
for them has arisen.

TECHNIQUES OF INVENTORY CONTROL

68
 Reduction of surplus stock is an essential requirement inventory control. Various
techniques are available to solve the various types of problems associated with inventory
control:-

1) Min-Max plan

2) Order cycling system

3) Fixation of various levels

4) Use of control ratios

5) Review of slow and non-moving items

6) The ABC Analysis

1) Min-Max plan:

In this plan analyst lays down a maximum and minimum for each stock item. Minimum
level establishes the reorder point and order is placed for quantity of material, which will
bring it to the maximum level.

2) Order Cycling System:

In this system, quantities in hand of each item or class of stock are reviewed periodically.
In that, if it is observed that stock level of a given item will not be sufficient till the next
schedule review keeping in view of its probable rate of depletion, an order is placed to
replenish its supply.

3) Fixation of Various Levels:

69
Certain stock levels or fixed levels are given below:-

A). Maximum Level

It is the quantity of materials beyond which a firm should not exceed its stocks. If
the quantity exceeds maximum level limit then it will be overstocking.

Maximum Level = Re-ordering level + Re-ordering Quantity-(Minimum

Consumption*Minimum Re-ordering period)

B). Minimum Level

It represents the quantity of stock that should be held at all the time, stock level is
normally not allowed facing below this level.

Minimum Level = Re-order level – (Normal consumption*Normal Re-order Period)

C). Safety Level

Normal issues of stock usually stopped at this level and made only under specific
instructions. Safety stock is a buffer to meet some unanticipated increase in usage.

Safety stock level = Ordering Level – (Average rate of consumption * Re-order level)

OR

= (Maximum rate of consumption – Average rate of consumption) * Lead Time.

d). Re-ordering Level

When the quantity of materials reaches at a certain figure then fresh order is sent to
get materials again.

Re-ordering level = Maximum Consumption*Maximum Re-order period.

70
 4) Use of Control Ratios:
Inventory turnover ratio helps management to avoid capital being locked up
unnecessarily. This ratio reveals the efficiency of stock keeping .

Inventory turnover ratio =Cost of materials consumed / Cost of average stock held
during the period

Where,

Cost of average stock = [Cost of opening stock + Cost of closing stock] / 2

Inventory turnover ratio [in days] =Days during the period /Inventory turnover ratio.

5) Review of slow moving and non- moving items:

Stock turnover ratio should be as high as possible. Loss due to obsolescence be eliminated
or these items used in some profitable work.. Slow moving stock should be identified and
speedily disposed off. The speed of movement should be increased. The turnover of
different items of stock can be analyzed to find out the moving stocks.

the percentage of slow moving stores = Slow moving stores / Total Inventory

71
TECHNIQUE USED IN IFFCO FOR INVENTORY CONTROL

The ABC Analysis:

With the numerous parts and materials that enter into each and every industrial
production, inventory control leads itself, inventory and foremost, to the problem of
analysis. Such analytical approach is popularly known as ABC (ALWAYS BETTER
CONTROL) Analysis.

This Plan is based upon segregation of material for selection control. It measures money
value i.e. cost significance for each materials item in relation to total cost and inventory
value. The logic behind is that the management should study each item of stock in terms

of its usage, lead-time , technical or other problems and its relative money value in the
total investment in inventories.

Critical, i.e. high value items deserve very close attention, and low value items need to be
devoted minimum expense and effort in the task of controlling inventories.

The ABC Reports are made:

“A” inventory reports lists parts having little or no turnover. Turnover frequency is
measured by an exposure index. We calculate the index by dividing a part’s inventory
quantity by its usage during the most recent 24 month period.

“B” report shows the parts with more than a one year supply but less than a 2-year supply.

“C” report lists the parts with more than six months supply but not more than one year.

72
Criteria For Judging The Inventory System

While the over-all objectives of the inventory system is to minimize the cost to the firm
the risk level acceptable to the management, the more proximate criteria for judging the
are:

Comprehensibility -

Inventory system range from the utterly simple to the complex ones. Irrespective of how
simple or how complex a system is, regardless of whether it is automated or manual, it
should be clearly understood by all affected parties. The system must be properly
explained to all concerned people so that its purpose, logic and rationale are transparent.

This generates enthusiasm for the system and enhances its credibility. Otherwise it is
likely to be perceived as a mysterious ‘Black box’ of dubious value.

Adaptability -

The questions raised in this context are:

1. Is the system responsive to change?

2. Can new products, new situations and new requirements be handled by the system?

A certain degree of flexibility and adaptability must be desired into the system to make it
versatile. Of course this cannot be and this should not be carried too far. The system must
not provide for every possible and imaginable contingency. If it is developed with this
ideal, it is likely to be a complex monstrosity. Remember the caveat that the design of any
system should ordinarily take care of about 90% of the cases, leaving the balance 10% to
be handled by hand.

73
Timeliness -

Inventories may suffer loss in value on account of a variety of factors. The more common
sources of value decline are:

 Obsolescence caused by changes in technology & shifts in consumer taste.

 Physical deterioration with the passage of time.
 Price fluctuation because of inherent volatility of certain commodities
The inventory system should be capable of inducing timely action. It should provide
adequate forewarning which triggers appropriate corrective steps

74
Inventory Software

In IFFCO the PSL software is used for the management of inventories. This software
holds all the transactions of the stocks. So this software helps much in maintenance of
stocks. It makes very easy to account persons to maintain the transactions of inventories.

A part of this software is installed on the systems of the stores, whenever a transaction is
made in the store, the details of that transaction is reaches to the systems of the store
accounting section, because both the systems are connected in the local area network
(LAN). So with the help of LAN environment it is very easier to accountants to retrieve
the information regarding the transactions made by the stores.

Apart from this, this software has the variety of qualities which we can discuss with the
help of menus of software. There are six different menus in this software these are as
follows:

i. Data entry

ii. Queries

iii. Reports

iv. Processing

v. Calculator

vi. Exit

vii.

75
 DATA ENTRY MENU

Data Entry

SRV
Document entry
SIV
ISRV
SAV
STV
(IN)
Adjustment SIV
STV
(Out)

Adjustment ISRV

Physical
Verification Entry

Entry of Surplus/
obsolete/ Insur.

The very first menu that is data entry is used for the various types of entries of
transactions. In the data entry menu there are several options shown in above diagram.

Document Entry:

This option is used to enter the data in various types of documents like SRV,
SIV, ISRV, STV (in), STV (out) etc.

76
Adjustment Entry:

With the help of this option we may easily make the adjustments in the stock
issue voucher (SIV), due to any previous adjustment. If the value of material has wrongly
feed in the documents or the valuation is high then it is used to decreases the value of that
material.

Adjustment ISRV:

This option of data entry menu has the same working in issue stock return
voucher (ISRV). This is used whenever the valuation of any material has to increase. Thus
easily adjustments are made.

Physical Verification:

In case of verification of stock the person responsible for stock verification

estimates a range of items for verification and after verifies the selected range of items,
they punched the quantity verified or lock the verified quantity till the next verification.

Entry of Surplus/ Obsolete:

This option is used for adjust the surplus items which is declared by the plant.
The surplus items means, the items which are exceeds from the records. So in case of this
situation the accountants make entry @ of 1 Rupee per unit of items. There are some
spares which are not in used. We give entry them in surplus. While the spares which are
not in working condition or they are outdated, comes under obsolete items.

77
 REPORTS MENU

Reports

Summary account head wise

Month Report before PSL runs

PSL JV

Month Report after PSL runs

Inventory Consumption

Kardex

Code wise inventory status

Yearly summary for HO

Issue above

Issue more than

Other reports

78
Summary A/C head wise:

This option creates the summary reports of all the A/Cs in respect of accounts
heads like

 Inventory spares (Ammonia, Urea etc.)

 Loose Tools
 Chemicals
 General Stores
 Construction Materials etc.

Monthly report before PSL runs:

This option creates the monthly report of all the documents like – SIV, ISRV,
SAV, STV (in), STV (out) etc. so that the account persons may check whether the
documents are correct or not., because if there is any mistake in any document and PSL
run is performed it will create the wrong final reports.

Monthly report after PSL runs:

The working of this option is same as the previous option but the difference is
that the reports made after the PSL run are more accurate updated and non volatile in
nature.

PSL JV:

After processing of PSL run all the documents becomes updated and all the
transactions also gets updated. So that by this option we can see all the journal voucher of
the entries of inventories.

79
Inventory consumption:

This option of the report menu shows the data regarding the consumption of
materials according to the date. We can see the consumption of a particular item. This
report helps in forecasting of material purchasing for the future consumption of the
materials. It helps in deciding the re-order level of inventory.

Code wise inventory status:

This option creates a report inventory code wise. We can create report for
selected codes. This code is of 12 digits in the IFFCO.

Kardex:

The kardex is the very useful tool for showing the current status of all the items.
Kardex shows the update inventory and also shows the past status of every past tears. The
accountant may see the past status as on any past date. The kardex retain all information
about the material. As when the material was received i.e. receipts, when the material was
issued i.e. issues, its balance in the store, vendor, its current stock, its value, location in
the store and as well as its minimum, maximum and reorder level. Thus it reserves every
information about the materials.

It is in form of a software in IFFCO. Here I have given a example of kardex in which each
detail of material is written. It is as follows.

80
 QUERIES MENU

Queries

Brows Inventory Master

This menu has single option that is brows inventory master. In this option we may
see the status of various materials or items.

As the name of this menu, we can perform the query task, on the basis of material
codes, that are of twelve digits number. This option is very helpful in search of any
particular transaction in inventories. In a query task we are supposed to enter the material
code in the material code box and then click over the retrieve button. As soon as we click
over the retrieve button the whole in formation regarding that code is appears on the
screen.

The appearing statement contains the material code, material description, opening
quantity, closing quantity, values, PSL rate that is the per unit price and also the location
of that material.

81
 PROCESSING MENU

Processing

Weekly PSL proc.1

Put account group in

INVMAST

Reverse stock for Physical

Kardex mismatch

Cumulative process

Reverse stock for PSL Kardex

mismatch

PSL Process 1

Processing is the most important task of this software, because all the reports
which are forwarded to the concerning authorities and are the basis for the further actions
are made only after the processing or the PSL run. PSL processing makes update all the
documents.

82
PSL Process I:

The option process I update and calculate the values for all documents and makes
available to create the final reports. Once a PSL run is processed the data can not be
changed, So that this task is very sensitive so the operating person should have the great
care and responsibility in processing task. PSL Process is done for tallying codes and
value of the material.

Put A/C group in inventory Master:

This option also a processing task when we executes this option it assigns the
account group to all the inventory / item codes so that these codes may link to a particular
account group. In this inventory are grouped.

Reverse stock for PSL kardex mismatch:

It is very important processing because it creates a list of all the items which are
mismatching in respect of units / quantity between the

PSL and kardex. If there is any mismatch in PSL and Kardex the report shows those
mismatches on the screen.

Reverse stock for physical kardex mismatch:

This option creates a list of mismatches of karedx and physical verification. This
processing performed once in year, because the physical verification of the inventories is
done once in a year.

83
 Calculator & Exit Menus

The calculator menu has no sub option we can use the calculator only by clicking
on the calculator menu. It helps much in manual calculations make the surety of
correctness.

Apart from this the exit menu is simply for quitting the software, whenever we
click over the exit menu it exits from the software.

84
 PRODUCTION DEPARTMENT

IFFCO Aonla is town to production of Urea. It is carried out with the help of two
ammonia plants. For every ammonia plant there are two urea plants each of 1100 MTPD
capacity. Urea Plant is linked with two product handling plants. So, we can study the
production department into three parts as follows:

1. Ammonia Plant
2. Urea
3. Product handling Plant

Ammonia Plant:

Ammonia plant is designed to produce 1380 MTPD liquid ammonia based on

Haldore Topsoe Process with Natural Gas the main raw material. For the production of
Ammonia Hydrogen & Nitrogen are required in the ratio 3:1. The source of hydrogen is

85
Natural gas, water and the source of nitrogen is atmospheric air. Nitrogen gas is supplied
by GAIL through HBJ pipe line from Bombay High and is used as feed stock which
contains large percentage of Methane, along with Ethane, Propore, Butane, Pentane, CO2,
Nitrogen and Sulphur compounds. Small quantity of Sulphur compound in the gas is
removed by passing the gas through de-sulphurisation unit. Sulphur free gas is yhan mixed
with steam and sent to primary reformer where reforming reaction takes place in the
presence of catalyst and produces a gaseous mixture of hydrogen, carbon mono-oxide and
carbon- dioxide. Further reforming takes place in the secondary reformer where air is
added to furnish the nitrogen required for ammonia synthesis. Hot reformed gases from
Secondary reformer are cooled by heat recovery in Waste Heat Boilers, and introduced in
the shift

Converters where most of the CO get converted into CO2. Carbon dioxide from
gaseous mixture is separated in CO2 absorber using benefield process and sent to urea
plant. Residual of oxides of carbon in synthesis gas leaving absorber are converted to
methane in the Methanator.

Pure synthesis gas from methanator exit is compressed and sent to Ammonia
converter where ammonia is formed ammonia product obtain in sent to urea plant for
manufacturing urea.

Urea Plant:

Two streams of Urea plant each having capacity of 100 MTPD has been provide. Urea
process is based Snamprogetti Ammonia Self Stripping process.

Ammonia and CO2 obtain from NH3 plant are sent to Urea Reactor operating at 150
ATM pressure and 180o C temperature. In urea Reactor Ammonia and CO2 react to form
Ammonium Carbonate a part of which dehydrates to urea. Reactor product from urea
reactor flow to a steam heated H.P stripper where most of them converted carbamate get
stripped of as gaseous ammonia and COS. Urea solution having the bottom of stripper still
contains some amount of carbamate. Further purification of urea to about 72 %
concentration takes place in medium and low pressure decompressors. Vapour of ammonia
and CO2 obtained from the above purification section are converted into ammonium

86
carbamate and recycled back to Urea Reactor for production of Urea Vaccum
concentration are provided to concentrate 72 % Urea solution to 99.8 % in two stages
operating at 0.3 atm and 0.03 atm respectively. Urea melt ( 99.8 % concentration) from the
concentration section is pumped to the top of natural draft Prilling Tower and sprayed by
the means of rotating pril bucket. The fine droplets while descending through the lower
come into contact with cold air are solidify to form prills. Product Urea from the bottom of
prilling tower is sent to Urea Silo or Product handling plant.

Empty Bags:

Empty bag’s size is 36.25 in inches or 915 X 610 in mm, weighing 10 grams in
case HDPE bags made out of 10 X 10 mashes per inch using. Denier of tape equal to
1,000 and width of tape 1.5 mm. The monthly requirement of bag is around 10 Lakhs.
There are 2 million bag storage capacities in 1400 m 2 area. The cost of bags varies from
Rs 11.40 to 11.90 for HDPE and around 6.5 for Jute bag.

The bag will be supplied various vendors based at Kanpur, Calcutta, Hyderabad,
Ahmadabad, Aurangabad etc. The movement of empty bags from these destinations to out
side is by road. Average daily traffic will be two to three trucks. IFFCO has very strict
quality control of bags. The bags once are ready for dispatch from vendor’s workshop are
got inspected by various up to date inspection agencies sponsored by us. The consignment
on its arrival at site is also screened by our Laboratory before it is piled for storage. Storage
is equipped with EOT crimes two in number, each having lifting capacity of 1 tonne.

Railway Siding:

87
 From main track of Chandausi- Barely broad quage, NR section tapping has been
taken at Bisharat Ganj Railway, Take-up station. Two additional loop lines and
simultaneous reception facilities have been incorporated at Take-up station. Railway track
has been laid which is 09.38 km long through major one villages acquiring 110 acre
approx. of land.

In plant, yard forms 2.3 km in length and is equipped with:

I. 3 loading lines (from 700-715 meter in length).

II. 4 lines for dealing incoming and out going traffic (from 715-803 meter long).
III. 1 Engine escape line (685 meter long).
In addition to it, the plant has:

a. 2 lines each 340 meter long accommodating one rake length for fuel oil stock.
These lines are laid over ballast less platform and have concerts floor in order to
recover spillage / leakage while handling fuel oil stock.
b. 2 line each 340 meter long to accommodate off loading of completing Naphtha
rake, an alternative fuel for power plant.

88
 DIFFERENT VOUCHERS

In IFFCO there are 3 types of receipt and 1 issue voucher are generally used for the
particular receipt and issue material. These are listed as below:

1. RECEIPT VOUCHER

• SRV (Store receipt voucher)

• ISRV (Internal store receipt voucher)
• DCSRV (Direct consumption store receipt voucher)

2. ISSUE VOUCHER

• SIV (Store issue voucher)

3. ADJUSTMENT VOUCHER

• SAV (Stock adjustment voucher)

• STV (Stock transfer voucher)

SRV
When material is checked with challan / invoice and the purchase order for quantity SRV
(store receipt voucher) is prepared and the material kept in section.

SRV can be of two types:

(a) FIS (Receipt from supplier voucher)

89
These vouchers are generally generated by the store whenever the material is received from
the supplier/ vendor in stores.

(b) H.P (Receipt voucher for direct consumption)

These vouchers are generally generated when material is directly received by the indenter
for direct consumption of raw material.

The copy of these SRV will be dispatched departments such as:

(a) 1 copy to purchase department.

(b) 1 copy to indent department.
(c) 2 copy account department.
(d) 1 copy lie with stores itself.

ISRV (INTERNAL STORE RECEIPT VOUCHER)

If the hundred percent of the issued material have not been utilized by the particular
department or parties, in this stage the concerned party or department will revert back the
remaining raw material to store by using such type of issue voucher.

These ISRV can be of 5 types which are as follows:

BD: Such type of ISRV are generally used by the particular department for the general item.

BB: Such type of ISRV are used for the spare return by the particular department.

BC: Such type of ISRV are generally used by the contractor for return of remaining raw
material.

BE: These vouchers are used for stationary items.

BA: these are also used by controller for spares.

90
Note: The copy of these ISRV will be send to the following departments mentioned as:

(a) One copy to store.

(b) Two copy to account department.
(c) One copy lies with the indenter itself.

Note: The issue notes shall be priced on the Weighted Average Rate basis after accounting
the last receipt of the material. After ascertaining the nature of the expenditure , the job for
which the material is issued , an appropriate account code shall be given in accordance with
the chart of account.

91
 STORE ISSUE VOUCHER

No.

Deptt.

Job/ work order Cost Exp. code department See.

center

S Qty Qty
no.
Material Code Description U.M. Req Issued Balan Rs. P.
d. ce

Please use one voucher for max. Hash Total

four items Preferable same group

Authorised Received Issued Kardex Checked by MGR/ Sr. P.S.L.

by by by posted by J.S.O./ S.O. MGR(S) Posting

Name

Designatio
n

92
 IFFCO
INTERNAL STORE RETURN VOUCHER

ISRV No. Date

SIV No. Date

Job/work order Vendor Code Exp. code department See.

S.no. Qty Qty

Material Code Descriptio Unit Retu Receive Balanc Rs. P.

n rn e

Reason for Return- New/Serviceable/Recondition/Scrap/Empty cylinder

Inspected Authorise Returne Received by Kardex P.S.L. Posted by Certified

by d by d by Posted by

Name

Designatio
n

93
STORE ISSUE VOUCHER CONTRACTOR

No.

Deptt.

Job/ work Cost Exp. code department See.

order center

S. Qty Qty
no.
Material Code Description U.M. Req Issued Balance Rs. P.
d.

Please use one voucher for max. Hash Total

four items Preferable same group

Authorised Received Issued Kardex Checked by MGR/Sr. P.S.L.

by by by posted by J.S.O./ S.O. MGR(S) Posting

Name

Designatio
n

INDIAN FARMERS FERTILISER COOPERATIVE LTD.

AONLA UNIT

94
 STORES RECEIPT VOUCHER
SRV NUMBER

DATE

CRR NUMBER

SRV PREPARED:

PO No.& Date ABNL ABB Ltd. CRR RECD CHALLAN/BILL

Date Date No.

GR/RR No. Freight From: DEPT CODE: FORM 31 No.

Truck/Trailer/Wagon
Date:, Paid DEPT Name RR
Transporter FARIDABAD

S.No. ITEM CODE DESCRIPTION Unit Qty. Value Inspection

remarks

PO Card balance No Po:

SNo Challan:

Received:

Accepted: DIS/REJ
No.
Rejected:

PO Card balance No Po:

SNo Challan:

Received:

Accepted: DIS/REJ
No.
Rejected:

INDIAN FARMERS FERTILISER COOPERATIVE LTD.

AONLA UNIT
DIRECT CONSUMPTION STORE RECEIPT VOUCHER

95
 DCSRV SRV NUMBER

DATE

CRR NUMBER

SRV REF:

PO No.& Date IFPH CRR RECD CHALLAN/BILL

Date Date No.
Inter unit trans. IFFCO PHULPUR UNIT

GR/RR No. Freight From: TRK/WGN DEPT CODE: FORM 31 No.

Date:, Paid PHULPUR DEPT Name

Transporter

S.No. Unit Qty. Value Inspection

remarks
DESCRIPTION

PO BOLT WITH NUT SIZE M12*165MM No Po:

LONG PT.NO.BN 12*165(SS304)
SNo Challan: Exp.
Code
Received:
DIS/REJ
Accepted: No.
Rejected:

PO No Po:

SNo Challan: Exp. code

Received:

Accepted: DIS/REJ
No.
Rejected:

DESPATCH ADVICE NO:

TIN NO:

KER ENGG. WORKS C.B.GUNJ. P.O/W.O.NO:

BAREILLY
RAMPUR ROAD, BAREILLY AUTHORITY FOR
DISPATCH:GM

96
S.NO DESCRIPTION QUANTITY UNIT REMARKS

1 2RE-69 ROUND RAR(5 MR FOR

NO) MACHINING

2 MR -DO-

3 MR -DO-

4 MR -DO-

CASE DIMENSIONS& NET PKD.BY PREP. BY DESPATCH

MARK TOTAL NO PKG WT. THROUGH:
DOOR
DELIVERY
RR/GR NO:
GATE PASS:

PKGS FREIGHT

COST: RS.

SIV NO: SR. MANAGER STORES

THE AFORESAID ITEMS HAVE BEEN RECEIVED IN GOOD ORDER &

CONDITION

COPY TO: 1) CONSIGNEE 4) INDENTOR

2) TRANSPORTER 5) G.M.APP./W.O.FILE

3) CM(F &A)/ INSURANCE

. RECEIVER’S SIGNATURE& STAMP

97
REJECTION/DISCREPENCY REPORT

REF: DATED:

M/S AB SALES & SERVICES

365, HARRIS GANJ

KANPUR FAX:

CRR NUMBER:

SUB: OUR P.O. NO:4410/1294/WS0137//071125

YOUR REF/INVOICE/BILL.CHALLAN NO. 10/SP/TAX/08

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RR/LR NUMBER: GR 8319469 DATE:

Transpoter: SOUTH EASTERN ROADWAYS DATE:

BOMBAY

Dear Sir,

Please refer to the supply of materials against your invoice/Challan No. as mentioned
above. On opening the case/s and checking the contents the following discrepencies have
been observed.

S.No Material Unit QUANTITY Remarks

Description
Desp. Received Excess Short Rejected

1.

2.

The packing case/s was/were received in sound/broken condition.

ACTION REQUIRED BY YOU

YOU ARE REQUESTED TO:-

1. Make good of shortages.

2. Dispatch replacement against breakages/unacceptable material.

3. Inform disposal action for breakages/unacceptable material.

4. Being excess supply than our order quantity, material has not been accepted.

Cost of damage if any_____________________________________________

Payment Terms: yours faithfully,

99
 For INDIAN FARMERS FERTILISER COOP.LTD.

Location CH. MANAGER (STORES)

e-Mail:

Fax: Through E-proc Phone

INDIAN FARMERS FERTILISER COOPERATIVE LIMITED

Aonla Unit, P.O. IFFCO Township, Bareilly

TENDER ENQUIRY

MPR No 080380 Enquiry No: 6000/672/UT0044/IE/080308(*)

INDENTOR’S COPY This Enquiry is due on 14/07/2008

UTILITIES DEPT Desired Delivery: 4 Weeks

Enquiry Type Single Stage

Dear Sir,

Please submit your Sealed Quotation, with earliest delivery, as per terms and
conditions and specification given below and enclosed herewith.

S.No. Item Code Description Quantity Unit

1 DC Liquid Chlorine 99% pure as per IS code 220 MT

100
 646/1988(latest version) in IFFCO.

PERFORMANCE BANK GUARANTEE:

The seller on award of P.O./W.O., shall furnish a Performance Bank Guarantee equivalent
to 5% of the P.O. value in our Performa enclosed. This bank guarantee shall be issued by
any State Bank of India and its associates. Nationalised/ Scheduled Commercial Bank/
Cooperative Bank who are members of IFFCO’s consortium of Banks (Except other
cooperative and Gramin Banks) having branch in India and be valid to cover the
guarantee period with a claim period of further six months.

INDIAN FARMERS FERTILISER COOPERATIVE LIMITED

PURCHASE ORDER

Thru Courier

M/s : JASUBHAI ENGINEERING PVT. Order No.

Add: 803-4, Chiranjiv Towers, Nehru Your Quot:

101
place Our Enq No:

City: New Delhi Pin: 110019 Delivery

E-mail: Dely Pd.

Code: JASU Consignee:

Test Copy Destination:

Dear Sir,

Please arrange to supply the following as per your quotation referred above
subject to conditions mentioned herein and enclosed herewith.

S.No Description Quantity Unit Rate Amount

Total Value …………………

Price Basis : Ex-Works Ahmadabad

P& F Charges : P&F Charges @ 2.00% extra

Excise Duty : Extra as applicable against documentary evidence present rate is @

14.42%

Sales Tax : Extra as applicable against form ‘C’

Freight Condn.: On freight to pay basis.

102
 IFFCO-AONLA

MATERIAL PURCHASE REQUITION: MPR-NO.: 080472

Dept-Ref-No.: 2200/2171

Budget Sanctioned- Utilised- This Balance Issue-Date:

Code Amt Amt MPR(Rs.)
Expected:

Dly Date:

N*.05 ……….. ………… ……….. ………..

Class: Stock, capital, D.C., Supply, Ordinary, Proprietory, Domestic, Single stage

Indentor: ADMN SECTION

Suggested Vendor Ctegory: Godrej & Boyce Mfg. Co. Lucknow.

MPR Description: Procurement of official furniture for the year-2008

Brief Justification: Office furniture are required for different section/deptt.

Last Pos/WOs Ref Nos:

Last Pos/WOs total value:

103
S.No Item code Material Unit Quantity Inventory Value Stk-oth.unit/
decription required levels last 3yr
consumption

1 DC

2 DC

3 DC

INDIAN FARMER FERTILISER COOPERATIVE LTD.

AONLA UNIT SAV NUMBER: 089UYW008

DATE : 8/6/2009

STORES ADJUSTMENT VOUCHER

----------------------------------------------------------------------------------------------------------------------------------
--------------------------

FROM TO

----------------------------------------------------------------------------------------------------------------------------------
--------------------------

Sno Code No. E Stock

---------------------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------------------

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SIGN

INDENTER STORE KEEPER STORE STORE OFFICER

MANAGER STORE

SWOT ANALYSIS

Strength
1 Fertilizer is the basic raw material for agriculture production. No Govt. can dare to
make policies which are not conducive to the farmers.

2 Demand of fertilizer is more in the country than the production capacity therefore
whatever is produced will be sold.

3 Government ensures the availability of raw material (NG/NAPHTHA) at reasonable

price as it has at subsidy on fertilizer is subsidize product.

4 IFFCO is a co operative organization and selling its product through co- operative
channel. There are only to organization IFFCO & KRIBCO. it means not much
competition in the channel.

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5 all plants are of latest technology of art and are in healthy condition.

Weakness

1 As per by law of the company it can fallows the co- operative channel only for sale of
its product. In case demand fall short in the channel company end up with higher stock
inventory.

2 Price of the product cannot be raised and government pay the subsidies as per its
calculation of fertilizers cost.

Opportunity

1 IFFCO can cut on cost by reducing energy consumption for per MT of urea, thereby
enhancing it’s profitability. IFFCO has taken up energy saving project in all its five
ammonia plants at the cost of Rs 410 core.

2 IFFCO can also reduce it’s fixed cost per MT of urea by enchasing it’s production
capacity & thereby increase in production and profitability. IFFCO has taken up capacity
enhancement project for all its ammonia & urea plants.

3 IFFCO also taken up power project at Chhattisgarh.

4 IFFCO has also contributed 25% equity in Oman India fertilizers company (OMIFCO).

5 IFFCO is also perusing a multiproduct kisan SEZ at NELLORE in A.P.

6 IFFCO has also entered into a long term of take and supply agreement with International
Holdings of AUSTRALIA for supplying rock phosphate to insure raw material supply
NPK/DAP fertilizers plants.

Threats

1 NG supply in the country is not sufficient to meet present country requirement, however
NG in liquid from is imported from various Gulf countries and regasified at Petronet in

106
GUJRAT to meet demand of fertilizers units. If supplies of NG suffer due to an region, it
will be reflected in production of IFFCO.

2 Naphtha is also imported Gulf countries. Its rates are not stable in the international
market & it availability is also affected by its international demand.

3 Rock phosphate is also imported to produce NPK/DAP at IFFCO’s Kandla & Paradeep
Units. Supply of ROCK Phosphate is also a threat to the production NPK/DAP. It rate are
not stable in the international market.

Analysis

With the finding of NG at KG basin of RIL most of requirement of fertilizers units will be
meet for the countries on resources and dependability on the import will be reduce there
by ensuring the raw material supply to the fertilizer units at reasonable price. Further
IFFCO has made long term agreement for procurement of ROCK phosphate with various
countries to overcome it major threats of raw materials for the production of NPK/DAP.
Therefore it can be said that IFFCO is on sound footing to protect it stability and enhance
it profitability by cutting on cost and increasing production in years to come

Strategies

1 IFFCO is doing its best to conserve energy & keeps it consumption at lowest label

2 Enhance its production by enhancing the capacity of the exiting plants & constructing
new plants.

3 reducing cost by low energy consumption & increasing production to enhance it

profitability.

4Ensure supply of raw material by entering into agreement nationally or international with
the suppliers.

5 IFFCO also care for farmer and the community. This commitment is reflected in many
ways, on a day- to-day bases. IFFCO believes in the welfare of society. It has embarked

107
on many Corporate Social Responsibility(CSR) Project. These projects cover education
,community development, environment & health.

a) IFFCO has installed CDR plants to reduce discharge of flue gases in the atmosphere.

b) IFFCO has adopted 439 villages, with special emphasis on agriculture and better for
management, thus empowering many lives.

c) ITGI in collaboration with IFFCO has introduce for farmer a Sankat Haran Bima
yojana . Under this policy farmer are provided insurance against accident with the
purchase of a 50 kilogram bag of IFFCO fertilizer. This policy has helped over 7000
people since its inception in sep. 2001

d) IFFCO has initiated several promotional projects to provide greater opportunities to

the farmer by organizing field day, farmers meetings, sales point personal tanning,
crop seminars, special agriculture campaigns to effect transfer of modern farming
trends. Besides, Kits containing seeds, fertilizers, bio-fertilizes and agrochemicals
along with book lets-literature were distribute to the farmers. The aim enhancing crop
productivity and thus improving lives

This has brought the farmer community nearer to IFFCO & IFFCO product as popular
brand which ultimately raised demand IFFCO product.

Key Finding, Learning & Recommendation

108
 I had done my project in inventory management & analysis of IFFCO Financial
strength by ratio analysis. Further .I have also understand the role of F&A departments at
unit level.

Conclusion

Therefore it can be said that IFFCO is on sound footing to protect it stability and
enhance it profitability by cutting on cost and increasing production in years to come.
Further IFFCO has also taken various other venture like SEZ at NELLORE, Power plant
at CHASSIGARDH, IFFCO Tokio General insurance, IFFCO Kisan Sanchar L.T.D.,
IFFCO has taken Joint Venture out of India i.e. OMIFCO at OMAN, JORDAN India
fertilizer company , Industrial Chimiques DU Senegal (ICS)and Kisan International
Trading FZE at Dubai. Therefore IFFCO main business is Product & sell fertilizers but it
has extends its wings for backward integration& meet the needs of its services
Requirement & to serve better to the famer community.

It might seem axiomatic that inventory control is efficient as long as inventory level
is going down.But the fact is that if inventories are minimized without adequate
operations, inventories have been mismanaged rather than controlled efficiently. Thus, the
basic objectives of inventory management appear to be conflicting in nature. Inventories
should increase or decrease in amount or time as related to sales requirements and
production schedules.

In most inventories a small proportion of items accounts for a very substantial usage
(in terms of monetary value and annual consumption ) and a large proportion of items
accounts for a small usage. ABC analysis based on this empirical reality advocates in
essence a selective approach to inventory control, which calls for a greater concentration
of efforts on inventory items accounting for the bulk of usage value.

Responsibility for control of inventories is of the top management. Though decision

in this regard might well be based upon the combined judgement of the production
manager, the sales manager and the purchasing manager. This is desired in view of the
financial considerations involved in the problem and also because of need for
coordinating different kinds of inventories and conflicting view points of different

109
departments. Decisions relating to inventories should be taken by higher authority of the
organisation as well as departments.

There are some points that may be given as recommendation or a program may be
constructed for inventory monitoring and controlling which consists of following
elements:

• Active disposal of goods that is surplus, obsolete and unusable.

• More effective exercise should be followed of vigilance against imbalance of

raw material and work in progress which tends to limit the utility of stocks.

• To strict adherence to production schedule.

• To shortening the production cycle.

• To change in design to maximize use of standard parts and components, which

are available off the shelf.

• To maintain the special pricing to dispose off unusually slow moving items.

• To make vigorous efforts to expedite completion of unfinished production jobs

to get them in to sellable condition.

110
 BIBLIOGRAPHY
1. Advanced Accountancy
Ninth Edition

S N Maheshwari , S K Maheshwari

Vikas Publishing House Pvt. Ltd.

2. Financial Management
Ninth Edition

I M Pandey

Vikas Publishing House Pvt. Ltd

3. Management Accounting
Third Edition

M Y Khan, P K Jain

Tata Mc-Graw Hill Publishing Company Ltd.

WWW.IFFCO.COM

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ACCOUNT MANUAL OF IFFCO, AONLA

112